Question

Ready Anytime, Inc. had the following information for the month of March:

Direct Materials $4,000

Direct Labor: $1,500

Packaging Materials: $100

Packaging and shipping labor: $90

Overhead rate: $20/labor hour

Wages rate: $15/hr.

Sales price: 150% of Cost of Goods Sold

Based on above information, Ready Anytime, Inc’s Cost of Goods Sold in March is:

Group of answer choices

A.)$7,500

B.)$7,810

C.)$7,690

D.)$7,000

E.)None of these numbers is correct.

Answer 1

Correct Option A: $7500
Calculation of Cost of Goods Sold
Direct Materials	$4,000
Direct Labor	$1,500
Manufacturing Overhead	2000
Total cost of Goods sold	$7,500
Manufacturing overhead = Predetermined overhead rate * No. of labor hour
=20*100
No. of labor hour = labor cost / labor rate per hour
= 1500/15
= 100 hours